Amazon, Indiana Reach Sales Tax Agreement

Tuesday, January 10, 2012 at 6:29 AM

(Indianapolis, Ind.) - Indiana is looking forward to millions of dollars more in tax revenue as it finalizes a deal with an online retail giant.

Amazon.com will start collecting seven percent sales tax on January 1, 2014 on purchases made by Indiana residents. The state and the company reached an agreement following a lawsuit from shopping mall developer Simon Property Group.

Estimates from the state indicated the new policy could bring in as much as $25 million a year from Amazon.com purchases. If all online retailers had to pay, Indiana could see revenues of another $75 million each year, the Indiana Department of Revenue estimates.

Online retailers don't have to collect sales tax on purchases by residents in states where they don't have a physical presence; however, Amazon.com does have two warehouses in Indiana – Plainfield and Whitestown.

Daniels believes collecting sales tax from all online retailers is a problem for the federal government to address.

“The only complete answer to this problem is a federal solution that treats all retailers and all states the same. But for now, Amazon has helped us address the largest single piece of the shortfall, and we appreciate the company working with us to find a solution,” said Daniels.

Word of the agreement in Indiana comes after Amazon made a deal last year with California.

Simon Property Group said it will drop its lawsuit because of the new agreement.